Bills Digest No. 31 2002-03
Superannuation Legislation Amendment (Choice of
Superannuation Funds) Bill 2002
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Other Political Parties' Views
Pros and Cons
Attachment: Choice under State
Contact Officer & Copyright Details
Legislation Amendment (Choice of Superannuation Funds) Bill
27 June 2002
House: House of Representatives
1 July 2004
employees with a greater choice in the selection of employer
sponsored superannuation provider by amending the
Superannuation Guarantee (Administration) Act 1992.
Proposed reforms designed to provide people with
greater choice of superannuation fund have been the subject of
public debate since 1996. This section provides a history of the
public debate on these reforms.
Federal income tax laws provide numerous
incentives to encourage employers and employees to provide for
employees' retirement by contributing to superannuation funds. The
- employer superannuation contributions (for the benefit of
employees) being deductible to the employer
- superannuation fund earnings and capital gains being taxed at
- employee (or undeducted) superannuation contributions being
exempt from tax
- superannuation benefits taken at retirement age being taxed at
- an 18 per cent rebate on spouse contributions of up to $3000
per annum to the superannuation fund of a spouse who has an annual
income up to $10 800 annum
- a 15 per cent tax rebate on the assessable part of an annuity
or pension payment, where that annuity or pension was purchased
from a taxed superannuation, and
- low income employees being entitled to a tax rebate of up to
$100 for personal contributions made to a superannuation fund.
Taxation concessions are provided at a cost to
Government revenue. It is estimated that the concessional tax
treatment of superannuation cost $10.3 billion in
In addition to using tax concessions (a
"carrot"), Federal and State legislation compels employers (ie.
"uses a stick") to make provision for employees' retirement by
making them contribute to superannuation funds on behalf of their
employees.(2) Compulsion is imposed by industrial awards
(Federal and State), and the Federal Superannuation Guarantee
Charge (SGC) scheme.
Due to a combination of Federal and State
legislation, it is not common for employees to be able to choose
the fund into which contributions are paid. In practice, a range of
circumstances exists, depending of the jurisdiction of the law
imposing the obligation on the employer. For example, some
employers may offer a choice of fund, even though they are under no
obligation (Federal or State) to do so. For some employers, the
relevant superannuation fund is specified in an award (either
Federal or State), another industrial instrument (such as a
certified agreement), or legislation. Some Federal and State awards
may enable employers to pay into one of a number of funds,
ultimately leaving the choice of fund to the employer. In some
States, employees can exercise a form of choice of fund in respect
of contributions made under an industrial award. The obligations
under Federal and State laws are discussed in the following
At the Federal level, compulsory employer
superannuation can exist under either an industrial award or under
the SGC scheme.
The distributions of the contributions vary
under the two schemes. Generally, award superannuation is
contributed to an industry fund, however some industrial awards
offer members and employers a choice of fund. Industry funds have
equal employer and union representation in the board of trustees.
Under the SGC scheme (where the employer makes the contribution
voluntarily rather than paying the SGC, as is the normal case), the
employer has the choice of fund to which contributions are
There are variations on these general principals
such as where the employer and employee discuss to which fund
contributions are to be made to and where SGC contributions are
made to an industry fund. However, there are pressures on employers
to seek the least expensive way of paying superannuation
contributions which generally means that the employer will choose
one fund for all employees so that they do not have to deal with
more than one fund. Costs rise when employers have to contribute to
more than one fund, and naturally, employers want to contribute to
as few funds as is possible. The more funds that the employer has
to contribute to, the higher the administrative costs imposed on
Under award superannuation, the fund to which
contributions are to be made is specified in the award. Under SGC,
superannuation contributions must be made to a complying fund,
which is one certified by the Australian Prudential Regulation
Authority (APRA) under the Superannuation Industry
(Supervision) Act 1993.
State awards oblige certain employers to make
superannuation contributions on behalf of their employees. In most
cases, the award specifies a particular fund. Some State industrial
legislation (and industrial awards) permit choice of superannuation
fund for contributions made in accordance with a State industrial
award. The State jurisdictions that have unilaterally implemented
choice of superannuation fund (and the relevant Acts) are as
- Industrial Relations Act 1999 (Queensland), section
- Industrial Relations Act 1996 (New South Wales),
- Industrial Relations Act 1979 (Western Australia),
These provisions are reproduced at the
Prior to the 1996 election, the Coalition made
the following promise on choice of superannuation fund.
Awards will be required to offer workers a
choice of up to five funds including employer, industry, personal
and RSAs. Additional funds may be used with the employer's
concurrence. Workplace agreements would include similar choice
Additional details on the Government's choice of
fund proposals were announced in the 1997-98 Budget. The original
proposals, which were subsequently altered, had the following
- employers would be required to offer a choice of a minimum of 5
complying funds or Retirement Savings Accounts (RSA) to choose
from, including an industry fund (where one exists), a public offer
fund, a RSA, a RSA provided by the institution receiving the
employee's pay (if the institution offers RSAs) and, if it exists,
an in-house superannuation fund
- if the employee did not make a choice of fund within 28 days
the employer could nominate the fund
- the choice of fund was to apply to new employees from 1 July
1998 and to existing employees two years later
- Federal awards relating to superannuation would be overridden
by the legislation but this would not apply to superannuation
payable under State awards due to Constitutional restrictions
- agreements under the Workplace Relations Act 1996
could overrule the legislation, and
- the legislation would not apply to unfunded government
Following the release of the policy there was
considerable employer concern regarding their potential liability
if they failed to provide sufficient, or accurate, information
regarding the various funds that their employees had to choose
from. Employers feared that they may be held liable for any loss
suffered by an employee if they provided insufficient, false or
misleading information. Lobbying from various organisations,
particularly employer groups, resulted in the proposals being
changed and the changes were announced by the Assistant Treasurer
in a Press Release dated 25 November 1997. Major changes related
- employers would not be liable where they have complied with the
- removing the requirement that employers had to offer a RSA from
the institution that received the employee's pay, where such a RSA
existed, so reducing the number of alternatives that had to be
offered to 4
- allowing employers to offer the employee unlimited choice of
fund (where the onus will be on the employee to collect the
relevant information and select the fund of their choice), and
- allowing the selection of the funds to be offered to be
facilitated through one institution or service provider.
The choice of fund rules would be enforced by
providing for a maximum increase of 25 per cent in the SGC
that would have been payable if no superannuation contributions had
In March 1998, the Senate Select Committee on
Superannuation released it 28th report Choice of
Fund.(5) The Committee inquired into the provisions
of the Government's legislation on choice of fund (the then
Taxation Laws Amendment Bill (No. 7) 1997), and related issues.
The Committee encountered considerable support
for the broad concept of choice of fund, although many witnesses
were doubtful to varying degrees about its practical operation. The
Committee also encountered some dissent about whether the policy
would deliver the anticipated economic benefits.
The Committee considered many issues during its
hearings, including the following:
- there was a great deal of competition within the industry,
particularly between fund administrators and investment managers,
driven by the demand of well-informed trustees
- the policy was being driven by actual demand for change on the
part of employers and employees (ie, that there was no evidence
that significant numbers of employees sought choice of fund)
- employers regarded choice as yet another unwanted
- supporters of choice were principally motivated by possible
commercial advantage from the policy
- the success of the policy depended on employees making an
"informed choice" that employees understand the consequences of the
decisions they make (in many cases, this may mean staying with
their current fund)
- witnesses called for extensive education campaigns to ensure
consumers make an informed choice (some cast doubt on whether such
an education campaign is achievable in the relatively short time
before the legislation is to come into force)
- the information provided to employees who are offered choice
should not create an atmosphere that encourages change for the sake
of change. Australia must learn from the U.K. experience.
- key feature statements (disclosing fees, charges, commissions
and other key features) be standardised and simplified, so that
consumers can "compare apples with apples"
- investment choice within funds (or member investment
- the selection of the default fund
- availability and level of death and disability insurance
- consumer protection, including dispute resolution
- application of choice to defined benefit schemes
- the proposed definition of industry funds
- the implications of removing superannuation from the allowable
matters list under the Workplace Relations Act 1996.
Government Senators on the Committee recommend
that the Senate pass Taxation Laws Amendment Bill (No.7) 1997
without further delay.
Labor Senators on the Committee stated that
choice is being driven by the Government's ideology and vested
interests that stand to benefit from choice. Labor Senators
recommend that the Taxation Laws Amendment Bill (No.7) 1997 not be
supported without extensive amendments. Labor Senators proposed
amendments on issues such as: timing, disclosure, choice of the
default fund, insurance, the definition of 'industry-based funds,'
the need for consistency with State choice legislation, the removal
of superannuation from federal awards, and the need for an
Australian Democrats Senators on the Committee
saw merit in moving to improve the choice mechanisms within the
superannuation system as a means of enhancing the ownership and
control by members over their investments. They also noted that
choice should be implemented in a way that maximises benefits to
employees while minimising costs to the system as a whole. The
Australian Democrats argued that Government's choice regime needed
to be substantially amended to shift the benefits of the proposal
in favour of employees.
In the 39th Parliament, two separate
Bills were introduced to implement choice of superannuation fund.
The history of the passage of these Bills is provided below.
The choice of fund rules were originally
introduced in Taxation Laws Amendment Bill (No. 7) 1997 which also
contained a number of unrelated taxation measures.
As noted in the background contained in the
Digest for Taxation Laws Amendment Bill (No. 7) 1997,(7)
concerns had been expressed early on that there would be
insufficient time for the passage of the legislation and its
implementation before the starting date for new employees proposed
in that legislation, ie. 1 July 1998. A specific concern was that
there would be insufficient time for an education campaign to
explain the choice rules to employees and employers to enable them
to make informed decisions. In addition, the relevant regulations
had not been finalised.
On 8 April 1998, before the Taxation Laws
Amendment Bill (No. 7) 1997 was introduced into the Senate on 13
May 1998 as the Taxation Laws Amendment Bill (No. 3) 1998, the
Assistant Treasurer announced that the starting date for the choice
of fund rules would be deferred, although no new starting date was
given at that time. The Assistant Treasurer announced on 13 May
1998 that the new starting date would be 1 July 1999 for new
employees and that the starting date for existing employees would
remain the same, ie. 1 July 2000.
To enable the passage of the other taxation
measures in Taxation Laws Amendment Bill (No. 3) 1998, the choice
of fund measures were removed from the Taxation Laws Amendment Bill
(No. 3) 1998 in the Senate and reintroduced in a stand-alone Bill,
the Superannuation Legislation Amendment (Choice of Superannuation
Funds) Bill 1998.
The Senate debated and defeated the
Superannuation Legislation Amendment (Choice of Superannuation
Funds) Bill 1998 on 8 August 2001.
During the 2001 election campaign, the
Government reaffirmed its commitment to choice of superannuation
fund in its superannuation policy statement A Better
The 2002-03 Budget provided further details
about the implementation of these proposals. An extract from the
Budget Papers is reproduced below.
Choice of superannuation fund and
Australian Taxation Office
The Government has allocated $28.7 million
for the Australian Taxation Office (ATO) to administer choice of
superannuation and undertake an extensive community education
campaign to inform employees and employers of their rights and
obligations in relation to choice of superannuation; and inform
superannuation funds and their members about portability of
existing superannuation balances. The Government will give
employees the choice to determine the superannuation fund into
which their Superannuation Guarantee contributions are paid, and
allow members of accumulation funds to move existing benefits to
their fund of choice.
These policies will increase competition,
efficiency and performance within the superannuation industry and
benefit members through lower fees and charges and increased
This measure will involve expenditure of
$12.7 million in 2002-03, $10.3 million in 2003-04,
$3.4 million in 2004-05 and $2.3 million in 2005-06 which
is being fully absorbed within the existing resourcing of the
The items in this Bill amend the
Superannuation Guarantee (Administration) Act 1992.
Item 22 of Schedule 1 of the
Bill inserts the requirements that must be complied with to satisfy
the choice of fund rules. Proposed section 32C
provides that the requirements will be satisfied in a number of
- where the employer contribution is made to a chosen fund (see
below), a default fund (see below) or for a member of either of the
Commonwealth schemes (CSS and PSS) - the contribution is made to an
unfunded public sector scheme
- the contribution is made under an Australian Workplace
Agreement or a certified agreement
- for people employed under State awards, the requirements will
be taken to have been satisfied.(10) It may be noted
that the SGC scheme as a whole applies to State employees as well
as those employed under State awards and is based on the taxation
power of the Commonwealth which also applies to State award
- where contributions are made under relevant Victorian or
prescribed Commonwealth, State or Territory legislation, and
- contributions made after employees cease employment.
4 provides the processes that can be followed for choosing
a fund. Proposed section 32F
provides that an employee can select a fund in accordance with
requirements of proposed Division 6. Under this
process, an employer must give employees a 'standard choice form'
within 28 days of the employee commencing or within 28 days of the
employee requesting a choice, although there may only be one such
request every 12 months. The employer must also offer a choice
within 28 days of becoming aware that they cannot contribute to the
chosen or default fund. As well, the employer may offer a choice at
any time the employer chooses (proposed
sections 32M and 32N).
A fund will cease to be a chosen fund if:
- there is another fund that is a chosen fund for the
- the employee has not given the employer a written notice
stating that the old fund continues to be a chosen fund for the
- the employee requests a 'standard choice form' and the employer
does not provide it within 28 days
- if it is impossible for the employer to contribute to the
chosen fund, and
- it ceases to be an eligible choice fund (proposed
While the example given in the Bill is of a
closed fund, it may take litigation to establish exactly the
meaning "impossible for the employer to contribute to the chosen
fund." For example, would this include the employer not being able
to finance the contributions? (proposed section
32D lists the superannuation providers that will be
'eligible choice funds.' They are:
- a complying superannuation fund or scheme
- a RSA, and
- where the fund is presumed to be a complying fund while further
information is sought or a decision on complying status is
This restrictions ensures that superannuation
contributions are made to funds that comply with (or are in the
process of complying with) the superannuation prudential standards
enforced by the Australian Prudential Regulation Authority.
Proposed section 32K
establishes the default fund that will apply to an employee.
For new employees or on-going employees whose
default fund has ceased by virtue of proposed section
32L, the default fund will be:
- the Commonwealth or Territory industrial award fund for the
- if there is no Commonwealth or Territory industrial award fund
for the employee the majority fund, or
- if there is no Commonwealth or Territory industrial award fund
for the employee and no majority fund any eligible fund chosen by
the employer (proposed section 32K(2)).
If there is more than one fund provided in the
award for employees, the employer must choose one as the default
fund for the employee (proposed sections 32K(5)
The majority fund is the 'eligible choice fund'
to which the employer contributes on behalf of more employees than
any other fund (proposed sections 32K(7),
(8) and (10)). If an employer
contributes on behalf of the same number of employees to two or
more funds, the employer must choose one of them as the default
fund for the employee (proposed sections
On the commencement date of the Bill (1 July
2004), the default fund for existing employees will be last
eligible choice fund to which the employer contributed to on behalf
of the employee prior to 1 July 2004 (proposed sections
A fund ceases to be a default fund if:
- the employee ceases to employed by the employer
- the employer ceases to be able to contribute to the fund on
behalf of the employee
- the default fund ceases to be a default fund for that employee,
- the employer cannot obtain the information Bout the default
fund required under proposed paragraphs 32P(1)(d),
(e) and (f) (proposed
Proposed section 32P provides
that a 'standard choice form' contain the following
- a statement that the employee may choose any 'eligible choice
fund' as a chosen fund
- the date the form was given to the employee and the date by
which the employee must make a choice, and
- information required to be provided in accordance with
Regulations, including details of the default fund and particular
information for members of defined benefit fund members about their
Employees must advise the employer of their
chosen fund, in writing, within 28 days of being given the
'standard choice form' (proposed section 32Q).
An employer may also request an employee provide
notice that the chosen fund is a complying fund (proposed
section 32S). This must be provided within 28 days of the
Employers' potential liability for damages will
be addressed by proposed section 32ZA which
provides that an employer will not be liable for anything done in
complying with the choice of fund rules.
Proposed section 32V makes the
following exemption from the choice of fund requirements:
- defined benefit funds in surplus at all time since 1 July 2004,
- defined benefit members of defined benefit funds that have
reached their accrued benefit maximum.
The ALP voted against the previous Bills
implementing choice of fund.
Early indications were that ALP Members and
Senators would continue to oppose the Government's Bill to
introduce choice of fund. On 2 August 2002 Senator the Hon.
Nick Sherry released the Labor Party's Superannuation Policy Paper
A: Broader Choice, Stronger Protection and Fairer Tax.
This paper does not set out the ALP's views on the Government's
Bill, rather it outlines broader choice of fund options,
- Full portability and automatic consolidation of multiple
accounts unless an individual determines otherwise
- Banning of entry and exit fees that act as a barrier to this
- Full portability will streamline the system by reducing the
current 24 million accounts for 8 million fund members.
- No employer veto on an employee's choice of fund
- Prohibiting entry and exit fees that act as a barrier
- A cap on fees and charges that can be charged against the
employees 9 per cent superannuation guarantee
- Meaningful disclosure so that consumers can make an informed
- Full investment choice options including ethical
- Full compensation in the event of theft and fraud
- Expanding compensation to certain post-retirement products not
currently protected at all
- Extending employee entitlements protection on bankruptcy of a
business to include outstanding superannuation monies
- It is critical in any private retirement savings system that
Australians are fully compensated if their money is stolen or if
their employer goes bankrupt
- Ensuring all employers allow voluntary salary sacrifice
contributions by employees without deducting it from the base of
compulsory superannuation guarantee
- Greater contribution incentives for the self-employed
- A fairer tax cut by either cutting the contributions tax for
all Australians who pay it from 15 per cent to 13 per cent or
cutting that tax for people aged 40 and over from 15 percent to
11.5 per cent.
- Labor's alternative tax cut is fairer and better targeted than
the Liberal's proposal to cut tax only for those earning more than
$90,500 a year.
The Australian Democrats have been reported as
stating that "they will not be changing their policy on
superannuation."(11) This policy included a condition
that they would support choice of fund on the condition that
survivor's benefits be payable to members of same sex couples.
The Australian Democrats have also have also
stated that the current law should be amended to allow survivor
benefits to a wider range of people, including from children to
their parents, between siblings, and to life long
The Senate Select Committee on Superannuation
examined the arguments for and against choice of
fund.(13) Some of these arguments (and some contrary
views) are outlined below.
Pro Choice of Fund Arguments
The reasons given for the introduction of the
choice of fund rules is given in the second reading speech to the
Taxation Laws Amendment Bill (No. 7) 1997.
The choice of fund arrangements are designed to
give employees greater choice and control over their superannuation
savings, which in turn will give them greater sense of ownership of
these savings. The arrangements will increase competition and
efficiency in the superannuation industry, leading to improved
returns on superannuation savings.
The economic argument in favour of choice has
been applied in other industries where de-regulation and
competition has been introduced (airlines, telecommunications,
It is unusual that for a compulsory financial
product like superannuation, people have limited choice over the
fund that holds their money. Currently, the Government decides and
forces employees to forgo current income in favour of forced saving
through superannuation funds. Employers decide the fund to which
contributions are made, and the trustees decide on the investment
strategy. For many, it is only at retirement that the member has
any significant control of their money. It is an important
philosophical issue for people to be able to control their money
and investments, including superannuation.
A contrary view is the status quo should be
preserved because superannuation is compulsory. It is one of the
few things that legislation requires employees to have, thereby
elevating it to a special status; government does not even have a
law that requires people to have bank accounts. The "special
because its compulsory" argument can be addressed by drawing an
analogy to Australian voting laws: it is compulsory for people in
Australia to vote, yet people have a choice over who they can vote
for, or even vote informally or not vote at all (although facing
risk of penalty). The "special because its compulsory" status of
superannuation could therefore be questioned.
Few groups or individuals have argued against
the principle of choice of fund.(14) While the proposal
has received support from a range of areas, a number of concerns
have been raised about the practical consequences of the
proposed legislation. Some of these main arguments are summarised
One problem that has been anticipated is an
increase in advertising for the various competing products, which
could have the effect of increasing costs to funds and so reducing
the return to members. For example, the Australian Consumers'
Association has stated that without adequate regulation, fees and
charges would keep rising with superannuation in the same way that
deregulation of banks led to an increase in bank fees and
Another potential problem is whether people will
be able to understand the information provided or will spend the
time understanding the information provided. Given that nearly four
out of five people do not complete their own tax return (due to the
complexity), even fewer attempt to work out their superannuation
arrangements. The Minister for Revenue and Assistant Treasurer,
Senator the Hon Helen Coonan has addressed this concern in the
The arguments against choice are tantamount to
saying that because buying a home is a complex and important
transaction requiring education and understanding if a good deal is
to be made, we should take the choice away from individuals and let
employers choose the right home for them.
I know it sounds ridiculous. We don't let
employers choose our homes. We don't let employers tell staff where
to bank, who to insure with or which stocks to buy. So why continue
with a system where people have little say in how one of their
largest assets is invested?(16)
The onus will be on the employee to research the
available options. A potential problem is the method in which funds
are presented to employees and the likely emphasis on short-term
growth rather than longer-term growth and stability. While previous
returns may be used to advertise the performance of a fund, a
trustee of the Australia Post superannuation scheme has noted:
"making investment decisions based on past performance data has
been particularly unreliable as an investment
There is therefore the fear that employees may
be offered advertising for a fund that promises a large return
based on short term performance rather than the long term viability
of the scheme and this "headline" performance could be used to
attract people to a fund where the potential member does not fully
understand the risks associated with the investment strategy of the
fund. The example often used is recent events in the UK where
people were given a choice of pension fund. It has been reported
that an inquiry into the new scheme found 570 000 cases of miss
selling worth approximately $11 billion.(18) In
addition, in 1997 in Chile, almost 70 per cent of fund members
applied to change between funds which were largely identical on the
basis of inducements offered by a "sales force hungry for high
Senator the Hon Helen Coonan has addressed this
concern in the following manner:
The other issue raised by those opposed to
employees having a say in where their superannuation is invested,
is how a similar policy was implemented in the UK some years ago.
What they fail to take into account is the different regulatory
environment we have in Australia, and particularly the recent
reforms to financial services regulation(20) which
provide the safeguards, disclosure and information that are needed
to successfully implement a system of choice.(21)
Other concerns are that choice of fund could
stimulate a further proliferation of accounts. Each employee has,
on average, over 3 superannuation accounts. Choice of fund only
applies to future (yet to be made) superannuation contributions: it
does not apply to the $532 billion already invested in
superannuation funds. Annual choice of fund offering, combined with
short-termism (employees choosing the fund with the highest
returns) may lead to a person having a number of small accounts
rather than one account.
The Bill differs in some respects from earlier
versions introduced into the Parliament. The major difference
involves the selection process: it is easier than the process
provided in earlier Bills.
In the former Bills, employers could offer their
employees choice of fund via one of three means: a workplace
agreement, the "unlimited choice method" (ie. the employee chooses)
or the "limited choice method" (the list of 4 or more funds chosen
by the employer and offered to the employee).
This Bill employs a model very similar to those
adopted in Queensland, Western Australia and New South Wales where
the selection of the "default fund" is simplified by first using
the fund nominated in the relevant industrial awards. The only
major difference is that this Bill requires employees to be offered
a choice, whereas Sate systems enable employees to make a choice,
should they be interested.
Choice of fund is a polarising issue. Views are
clearly divided along party lines. For many it is an important
philosophical issue that needs to be resolved by letting employees
choose their superannuation fund. For others, it is extreme folly
because of the Bills likely influence on fund costs, complicated
product information, the risk of members being fixated by short
term (rather than long term) performance, and the risk of further
multiple account proliferation.
- Department of the Treasury, 2001 Tax Expenditure
Statement, December 2001, p. 33.
- Superannuation funds are trusts run and administered by
trustees for the benefit of members.
- Super For All Security and Flexibility in Retirement The
Federal Coalition's Superannuation and Retirement Incomes
Policy, February 1996, p. 3.
- The Hon. Peter Costello, MP, Treasurer, Budget Measures
1997-98 Budget Paper No. 2, pp. 189-191.
- The report can be accessed via the following link:
- For more information, see Superannuation Choice-Do You Want
Insurance With That?, Research Note 25 1999-2000, Department
of the Parliamentary Library, 15 February 2000 (http://www.aph.gov.au/library/pubs/rn/1999-2000/2000rn25.htm).
- Liberal Party of Australia, 5 November 2001.
- The Hon. Peter Costello, MP, Treasurer, Budget Measures
2002-03 Budget Paper No. 2, p. 164.
- The 1997-98 Budget Papers stated that this was for
Constitutional reasons and that the States would be asked to pass
- Zilla Efrat, "Cherry in season on super," Super
Review, July 2002, p. 12.
- Senator John Cherry, 'Labor's choice options fall
shrot (sic) on equity test,' Press Release Number:
02/378, 2 August 2002.
- The Senate examined the provisions in an earlier Bill, that is
Taxation Laws Amendment Bill (No. 7) 1997. See Senate
Select Committee on Superannuation, 28th Report of the Senate
Select Committee on Superannuation: Choice of Fund, 28 March
- See Paul Cleary, "Getting a grip on fees," Australian
Financial Review, August 3-4 2002, pp. 16-27.
- Toni O'Loughlin, "Labor backs super choice if its cheap,"
The Sydney Morning Herald, 3 August 2002.
- Senator the Hon Helen Coonan, Minister for Revenue and
Assistant Treasurer, Retirement Incomes In Perspective,
Speech to the Personal Investor Magazine Awards for Excellence in
Financial Services 2002, Sydney, 24 July 2002.
- The Australian Financial Review, 15 January 1998.
- The Australian Financial Review, 11 December 1997;
Susan Hely, 'Choice: its not all right', Superfunds, May
1998, p. 15.
- Susan Hely, 'Choice: its not all right', Superfunds,
May 1998, p. 15.
- That is, Financial Services Reform Act 2001 that
commenced on 11 March 2002.
- Retirement Incomes In Perspective, Speech to the
Personal Investor Magazine Awards for Excellence in Financial
Services 2002, Sydney, 24 July 2002.
Industrial Relations Act 1999, section 405
(1) This section applies if an industrial
instrument requires an employer to
pay contributions to a specified superannuation fund.
(2) Despite the instrument, the required
contributions may be paid to a complying superannuation fund agreed
to by the employer and employee.
(3) The agreement must be written and signed by
the employer and employee.
(4) A person must not coerce someone else to
make an agreement mentioned in subsection (3).
New South Wales
Industrial Relations Act 1996, section 124
124 Superannuation fund contributions
(1) If an industrial instrument requires an
employer to pay contributions to a specified superannuation fund
for the purpose of providing superannuation benefits to or in
respect of an employee of the employer, the required contributions
may, despite the industrial instrument, be paid to a complying
superannuation fund nominated for the time being by the employee
and approved by the employer.
(2) However, subsection (1) applies only
- the nomination of the complying superannuation fund by the
employee is in writing and signed by the employee, and
- the employer has given the employee a copy of the nomination
and written notice of the employer's approval of the nomination,
- the employer retains a copy of the nomination.
(2A) An employee may, by notice in writing,
revoke a nomination under this section.
(3) In this section complying superannuation
fund means a superannuation fund that, for the relevant year of
income, is a complying superannuation fund within the meaning of
Industry (Supervision) Act 1993 of the
Commonwealth. Superannuation fund has the same meaning as it has in
Industry (Supervision) Act 1993 of the Commonwealth.
Industrial Relations Act 1979, section 49C
(1) In this section --
"complying superannuation fund or scheme" means
a superannuation fund or scheme --
(a) that is a complying superannuation fund or scheme within the
meaning of the Superannuation Guarantee (Administration) Act
1992 of the Commonwealth; and
(b) to which, under the governing rules of the fund or scheme,
contributions may be made by or in respect of the employee
permitted to nominate a fund or scheme.
(2) In exercising its jurisdiction under this
Part the Commission shall not make an award or order, or register
an industrial agreement, which requires contribution to a
superannuation fund or scheme by an employee or by an employer in
respect of an employee unless the award, order or industrial
(a) permits the employee to nominate a complying superannuation
fund or scheme;
(b) requires the employer to notify the employee of the entitlement
to nominate a complying superannuation fund or scheme;
(c) requires the employer --
(i) if the award, order or industrial agreement specifies one or
more complying superannuation funds or schemes to which
contributions may be made, to make contributions to that fund or
scheme, or one of those funds or schemes nominated by the employer,
until the employee nominates a complying superannuation fund or
(ii) if the award, order or industrial agreement does not specify a
complying superannuation fund or scheme to which contributions may
be made, to make contributions to a complying fund or scheme
nominated by the employer until the employee nominates such a fund
(d) requires the employee and employer to be bound by the
nomination of the employee unless the employee and employer agree
to change the complying superannuation fund or scheme to which
contributions are to be made; and
(e) provides that an employer shall not unreasonably refuse to
agree to a change of complying superannuation fund or scheme
requested by an employee.
(3) The Governor may make regulations --
(a) prescribing procedures to be followed by an employer in
notifying an employee of entitlement to nominate a complying
superannuation fund or scheme; and
(b) prescribing procedures to be followed by an employee in
nominating a complying superannuation fund or scheme.
(4) A person shall not by threats or
intimidation persuade or attempt to persuade --
(a) an employee or prospective employee to nominate a particular
superannuation fund or scheme; or
(b) an employer to make contributions to a particular
superannuation fund or scheme.
(a) in the case of an individual, $1 000;
(b) in any other case, $5 000.
"threats" includes any conduct
by an employer that clearly indicates to an employee or prospective
employee that employment or promotion is conditional upon the
employee nominating, or changing to, a complying superannuation
fund or scheme suggested by the employer.
29 August 2002
Bills Digest Service
Information and Research Services
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